BAKU, Azerbaijan, October 26. In a notable revision to its global energy outlook, BMI, a Fitch Solutions company, has raised its projections for diesel prices in 2023 and 2024, Trend reports.
This adjustment is attributed to ongoing production cuts by OPEC+ and a notable decline in global diesel stockpiles, which together are poised to bolster refining margins in the foreseeable future.
The extension of OPEC+ production cuts, set to continue through the end of 2024, has been further accentuated by Saudi Arabia's unilateral decision to slash its oil output by 1 million barrels per day. This has placed substantial pressure on diesel production, compelling refiners to resort to importing less dense and lighter crude oil blends that yield suboptimal results in diesel production.
While diesel inventories in Europe and the Americas have shown some signs of improvement in comparison to the previous quarter, they remain significantly below historical averages. This shortage comes at a crucial juncture as the northern hemisphere enters the winter season, traditionally characterized by peak demand for diesel. Consequently, this situation has provided robust support for diesel prices.
As a reflection of these dynamics, BMI has revised its global diesel price forecast for 2023, increasing it from $104 per barrel to $111 per barrel, with global diesel prices averaging $109 per barrel year-to-date. It's important to note that this revision suggests a bearish outlook compared to current spot prices. Diesel price weakness in the first half of 2023, coupled with the expectations of a decline in Brent crude oil prices in the fourth quarter of 2023, are expected to exert downward pressure on annual price averages.
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